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NAB: How An Offset Account Could Work For Your Home Loan
National Bank
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Would you like to pay your home loan off sooner? Silly question, right? It's worth knowing that the simplest of changes to your home loan account can make a huge difference in the time and interest charges that it takes to clear your home loan debt.
One simple way to pay your home loan off sooner is by using an offset account, such as the option offered by National Bank (NAB).
Using an offset mortgage account, such as the options offered by NAB, can slash years from the term of your home loan and can save you thousands of dollars in interest.
So how does it work? Essentially, your NAB offset account links your everyday transaction account, which may be a cheque or savings facility, to your home loan account. This means that every dollar in your transaction account which may include your regular salary, savings or bonuses works towards decreasing the amount of interest you pay.
The amount of money in your NAB offset account is deducted from your home loan balance before the interest is calculated. Say you have a home loan balance of $200,000 and your income and savings mean that you have $10,000 in your transaction account. This amount is deducted from your NAB home loan balance, and then interest will be calculated on the remaining $190,000. This process would continue for every day in the month, as interest is calculated daily but charged on a monthly basis.
The account maintenance fee for a NAB offset facility is $10 per month. If you currently have an NAB home loan but do not have access to an offset facility, you can pay a switch fee of $300 to establish an offset account.
When offset accounts were first introduced, they generally offset part of the interest, but now 100% offset options are common, including the offset option offered by Westpac.
Using an offset account is a simple and yet extremely effective way of paying off your home loan as soon as possible. Find out more about how an offset mortgage account could benefit your financial situation by speaking with your financial broker.
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